Completing the annual request-for-proposal (RFP) process is a time-consuming task, especially considering the sheer volatility of the market. Shippers devote a significant chunk of both their time and resources to annual RFPs, so it is crucial that these tasks be completed with the utmost care. For shippers hoping to spend minimal time engaging with the spot market, a forward-looking approach is also necessary.
In an industry in which change is the only constant, planning for all probabilities – and opening up to as many potential partners as possible – is a winning solution. After all, planning solely for today’s market does not guarantee success tomorrow.
One simple way shippers can increase the value of their RFPs is by including as many qualified third-party logistics providers (3PLs) as possible, increasing their odds of locking in the best available rates and service.
“What we have found is that shippers have a predisposition to not want to work with brokers. They think it will limit them in some way or raise prices, but research shows that it actually translates into better pricing and better service,” Capital Logistics CEO Jeff Gerson said. “It makes no sense not to always include brokers on an RFP because brokers help find capacity when asset-based carriers do not have available equipment. Shippers can be prepared for surges by working with brokers. The goal should be to get as many qualified brokers/carriers to expand the amount of capacity available for your freight, and simultaneously secure the best rates and service possible.”
While getting the best deal requires casting a wide net, Capital Logistics Vice President Greg Ackner cautions shippers against including companies on their RFPs before doing their due diligence. That means leaving companies with significant credit issues and large amounts of debt off RFPs. It doesn’t matter how great the rates are if the company in question cannot deliver on their promises.
“You don’t want to include a company that is at risk of closing their business or one claim away from losing their insurance,” Ackner said. “It is also important to check references and get a good understanding of how a company operates.”
Due diligence is not just for the shippers. For brokers hoping to find more success on RFPs, doing the legwork and having substantive conversations with potential customers from the beginning is an essential element of success. In order to prove they are the right team for the job at hand, brokers must actually know what that job is, and picking up the phone is the best way to find out.
“You have to ask questions and build the process from the ground up,” Ackner said. “In my 20 years of selling freight, I have never had any success on an RFP without having a conversation with the customer and understanding their business. There are a ton of variables in RFPs, and you will miss a lot of them if you aren’t having conversations.”
These conversations help identify well-suited partners, but they also help weed out bad matches. If a broker’s services are not aligned with a shipper’s needs, it is far better to know up front instead of attempting to power through an adversarial relationship over the next 12 months.
Casting a wider net and being more cognizant of which companies are or are not included on RFPs will help shippers get the most value out of these time-consuming and often tedious tasks. Starting conversations and making sure their own business practices are up to par will help ensure brokers land on more RFPs. Ultimately, rethinking this annual process works in everyone’s favor.